Western customers are moving towards an anti-Chinese consensus

Western customers are moving towards an anti-Chinese consensus

Hot on the heels of the war of words over China's currency policies, textile firms and workers have wasted no time in blaming unfair behaviour by the Chinese for the loss of their own jobs and contracts. Indeed, David Birnbaum believes we are headed for a global trade war which neither governments nor international institutions can stop.

In 1980 China was an economic basket case, trying desperately to climb out of the Cultural Revolution hole. 30 years later, and it is the world's presumptive second largest economy.

One man, Deng Xiaoping, changed the course of China. By any standard, this was a remarkable achievement. And, as always, there is a lesson to be learned.  

Above all, China's success is based on the ability of an elite to lead its people. Leadership consists of three attributes: focus, consensus and commitment.

To the Chinese life consists of a series of never-ending challenges, each of which exists to be overcome. Getting out the daily shipment, surviving the 18-month global recession, competing under the 43 year quota regime; it's all the same.

  • Focus on the problem until you find a solution
  • Achieve a consensus so that everyone can pull together
  • Maintain unwavering commitment until the problem has been solved (and a new problem appears).

From the Communist party, to the government, to the enterprise manager down to the worker, these attributes permeate Chinese society and have allowed the country to overcome problems while moving forward and forever upward.

Some may object to their goals, but only a fool would fail to respect the Chinese ability to achieve those goals. 

Competing with the Chinese juggernaut
There are those who would bring these attributes to the West in order to compete effectively with the Chinese juggernaut.

Clearly if President Obama were Chairman Obama his problems with the opposition would disappear. However, this is not the American way. 

Nevertheless, every time, we in the West face an economic, political, or military challenge there are those who would solve the problem by moving us from our seemingly feckless individualistic society to their seemingly more efficient collective society.

So it was true in WWII where the allies faced the axis dictatorships. It was true in the Cold War where Western liberal economies faced the Soviet collective economy. And it was true too in The Lord of the Rings where the seemingly powerless hobbits faced the seemingly invulnerable orcs.  

Here is the great historical paradox. The collective is almost always more focused. The collective almost always achieves consensus. The collective almost always displays a greater commitment. The collective should almost always triumph.

Yet historically the hobbits invariably win over the orcs- the individual has always defeated the collective. 

So it is in life. So it is in economics. So it is in the all important global garment export industry. 

It appears that the very attributes - focus, consensus, and commitment - which at first raises the collective society up, at some point impedes further progress, and eventually cause decline.

At some point these attributes, which were originally intended as the means to overcome problems and bring progress, transmogrify into tools to maintain power and control. 

Fight against consensus
The individualist society, on the other hand, by its very nature fights against consensus. Here, each individual's focus and commitment extends only to those immediate issues that directly relate to himself and his family.

The individualist society fears and distrusts government.

In the Western world, President Kennedy's statement "Ask not what your country can do for you but rather what you can do for your country," is an unrealistic pious plea.

The reality is that we would rather not ask our government to do anything. We follow President Reagan's observation: "The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"

Yet even in the most individualistic society consensus is possible. In a time of perceived crisis, totally disparate groups and individuals will join together to defeat a common enemy to achieve a common goal.  

The difference between the collective and the individual is that in the former the consensus comes from above, while in the latter it comes from below.

In the collective society the government leads the people, while in the individualistic society the people lead the government.

Prohibition, the tobacco law suits, the end of the Vietnam War, anti-abortion - just people coming together. In the face of the consensus from below, government helplessly follows the lead of its people. 

At this moment people in the United States and Europe are moving towards consensus: China is the enemy which must be stopped. 

The left looks at China and sees blatant human rights violations, uncontrolled pollution, child labour and sweatshop conditions. 

The right looks at China and sees hegemony, mercantilism, support for criminal regimes, exchange-rate extortion and overt attacks on the international trading system.

  • My job in Milwaukee was stolen by some crooked factory in Dalien.
  • My house was condemned because some Chinese crook shipped substandard building materials. 
  • My dog died because of poison pet food made by a crooked factory in China.

The list goes on and on. 

Truth, not perception
This is not about truth. It is all about perception. However perception, not truth, is reality.  

We are headed for a global trade war which neither governments nor the international institutions can stop.

The Chinese leadership cannot imagine that its customers are moving inexorably towards an anti-Chinese consensus which will force governments to take direct action against imports from China.

The Chinese leadership is blind to this threat because to the Chinese leadership, a consensus from below is an oxymoron. Below is chaos. Only the elite - the vanguard of the proletariat - can provide focus, consensus and commitment. 

Modern China was built by one great man, Mao Zedong who created a revolutionary command economy based on the belief China would triumph only if it could remain, standing apart uncontaminated from the rest of the world.

That belief eventually brought misery, famine and death to hundreds of millions of Mao's people.  

30 years ago, another great man recognized that if China was to grow and prosper, the Chinese government and its Communist party leadership must change course 180° both internally in its relationship with its people and externally in its relationship with its trading partners.

Where have you gone Deng Xiaoping? Your nation needs you now. 

David Birnbaum is the author of The Birnbaum Report, a monthly newsletter for garment industry professionals. Each issue analyses in-depth US garment imports of four major products from 21 countries, as well as ancillary data such as currency fluctuations, China quota premiums and clearance rates.